AuthorDiamantis, Mihailis E.

INTRODUCTION 3 I. SUSPENDING SKEPTICISM (AT LEAST UNTIL PART V) 12 II. MEASURING MADNESS 19 III. LEGALLY INSANE CORPORATIONS 29 A. Satisfying the Volitional Test 30 B. Satisfying the Cognitive Test 37 IV. THE ECONOMICS AND PSYCHOLOGY OF CORPORATE PATHOLOGY 43 A. Corporate Psychopathy 44 1. The Law's Role in Fostering Corporate Psychopathy 47 2. Corporate Psychopathy Not Eligible for the Defense 50 B. Corporate Irrationality and Identity Disorders 55 1. The Law's Role in Fostering Corporate Irrationality 56 2. Mere Corporate Identity Disorders Not Eligible 61 V. THE DEFENSE IN PRACTICE 63 A. Treatment after Acquittal 65 B. The Role of the Jury 71 C. Evidentiary Standards 74 1. At Trial 75 2. Post-Trial Commitment 76 3. Release 80 VI. VINDICATING VICTIMS 83 A. Justice Interests 83 B. Expressive Interests 85 C. Preventive Interests 87 CONCLUSION: WILL CORPORATIONS GO FOR IT? 90 "[E]liminating the insanity defense would remove... the vitally important distinction between illness and evil." (1) INTRODUCTION

There is a class of offenders, numbering in the millions, (2) that leading psychologists believe are constitutively psychotic. (3) Their behavior routinely defies common sense and ranges from bizarre to patently self-destructive. (4) Even though this behavior frequently exposes these offenders to crippling criminal liability, (5) not a single one has raised, let alone benefitted from, an insanity plea. (6) By failing to recognize the role that illness can play in bringing about their crimes, the law unjustly punishes defendants who do not deserve it. More importantly, the law undermines victims' interests. By refusing to properly treat these defendants' underlying disorder, the law leaves in place an unpredictable disposition to reoffend that risks creating future victims and diminishes the significance of past victims' suffering.

The "people" who comprise this group of offenders are for-profit corporations. The public's indignation at rampant corporate misconduct is palpable and justified. (7) Pharmaceutical companies poison our citizens, (8) car companies blacken our skies, (9) and multinational conglomerates corrupt our democracies. (10) We can only hope that government functionaries feel the same indignation when they respond. (11)

However, we should hesitate before reflexively calling on criminal law to punish every corporate harm. As I argue below, traditional modes of corporate punishment often do little to address victims' needs and nothing to address their deepest concerns. (12) Furthermore, behind any large corporation are thousands or millions of innocent stakeholders--employees, shareholders, creditors, and consumers. (13)--whose wellbeing is also on the line. (14) Although justice favors punishing culpable corporations, it also favors sparing these stakeholders the burdens of sanction when neither they nor their corporations are culpable. Criminal liability should not be a one-way ratchet. Some crime should be punished; other crime should be managed. Doctrines that establish guilt must be tempered by doctrines that excuse and treat the blameless and unblameable. (15)

Some will mistakenly think this Article is an exercise in corporate apology. It is worth pausing now, at the start, to insist adamantly to the contrary. This will be clear by the Article's end, after I have discussed the consequences of a successful corporate insanity plea. The motivating impulse of this Article is to meet the needs of individuals affected by corporate crime, both victims and innocent corporate stakeholders. While these interests should be the guiding light of corporate criminal law, that law presently disserves them all. Ordinarily, sensitivity to victim and stakeholder interests might require a zero-sum tradeoff of one against the other. (16) The corporate insanity defense provides a rare opportunity to advance both simultaneously, without requiring any legislative intervention.

Now is a good time to reconsider the scope and demands of the insanity defense. In March 2020, the Supreme Court decided Kahler v. Kansas and held that the Constitutioa (17) does not require states to offer the defense. (18) Kahler is a middle-aged white male. Commentators should pause to considered what implications the arguments in his case might have for defendants who are different from him. For example, some jurisdictions categorically exclude juveniles from raising the insanity defense, despite the fact that mental health is as much a concern among the young as it is among adults. (19) Similarly, all jurisdictions tacitly exclude corporations from the insanity defense. These exclusions are likely mistakes. 1 address the corporate exclusion below and argue that corporations, like individuals, can behave in ways that call reason and accountability into doubt.

The clearest, though by no means only, examples of such behavior involve plainly self-destructive corporate conduct. Often thought to be paragons of rational calculation, (20) corporations sometimes deviate in bizarre ways, far from the path of maximum utility. Consider the textbook classic, United States v. Sun-Diamond Growers of California. (21) In the 1990s, prosecutors accused Sun-Diamond of illegally funneling tens of thousands of dollars to a political campaign. (22) Legally speaking, Sun-Diamond committed bribery. (23) Colloquially speaking, it was, in the words of the D.C. Circuit, "befuddled." (24) Sun-Diamond had only the remotest of hypothetical interests in the politician's fortunes. The only sure result was that the payments exposed the corporation to significant legal risks. As the court remarked, Sun-Diamond looked more like a victim of its own misconduct. (25) While bound by current law to uphold the conviction, the court chastised the prosecutor for bringing the case in the first place. (26)

Sun-Diamond represents a broader class of cases where self-undermining corporate behavior conflicts with the rational behavior that responsible action presupposes. (27) In many instances of illegal conduct--from insider trading. (28) to embezzlement (29)--the criminal corporations are often their own and only victims. Corporations can face criminal charges for exposing their own secrets. (30) and stealing from their own coffers. (31)

Such bizarre corporate behavior only starts to make sense once we peel back the fiction that defines corporations as unified legal subjects, and peek inside at the real people, incentives, and systems that comprise them. Realistically speaking, Sun-Diamond did not, in its corporate capacity, bribe an irrelevant politician; an employee funneled Sun-Diamond's money to a personal friend. (32) Corporations do not share their own proprietary information; employees commit insider trading using corporate secrets for personal gain. (33) Corporations do not steal from themselves; employees embezzle corporate funds for personal use. (34)

Nonsensical corporate behavior is an inevitable byproduct of the particular way that the law construes corporate "personhood." (35) The law's simplistic conception of corporate psychology is unmoored from any organizational science or economic sense. According to respondeat superior, the centuries-old doctrine most jurisdictions use to hold an employer liable for the actions of its employees, (36) corporations basically do and think whatever their employees do and think. (37) This means that even when employees do or think things that make no sense from the corporate perspective, the law says corporate employers do and think those things as well. It makes no legal difference how hard corporations try to keep their employees on track through corrective policies and compliance procedures. (38)

Ordinarily in criminal law, patently nonsensical behavior strongly suggests that an individual criminal defendant has a condition that mitigates his responsibility. (39) The law recognizes that bringing the full destructive force of criminal sanctions to bear would be inappropriate in these circumstances. (40) A different official response (like mental health treatment) better meets the interests of justice.

I argue below that similar logic applies to some cases of corporate misbehavior. Corporate misconduct often occurs in an evil organization that deserves a harsh criminal justice response. But when corporate misconduct disserves the corporation's own interests, it may instead reflect a broken or exploited organization, rather than an evil one. It is hard to see what retributive or deterrent value there could be to punishment in those cases. If a corporation is broken, it may lack the rational mechanisms needed to weigh the deterrent costs of sanctions. If it is internally exploited, it already has reason enough to prevent further misconduct. Either way, there seems to be no tangible sense in which such corporations display the evil intent that is the lynchpin of retributive justice. Punishing them neither fixes their dysfunction nor sanctions the insiders who exploit them--it only serves to burden innocent corporate stakeholders who may have already suffered because of the underlying misconduct. (41)

Although the doctrinal focus of the corporate insanity defense must be on corporate defendants, any broader policy justification must focus on individuals. (42) Individual corporate stakeholders are surely one relevant constituency, but victims should come first. The corporate insanity defense would have no legitimate role in corporate criminal law if it undermined victim interests. These interests include paying restitution, preventing future corporate harms (whether to past or to future victims), and giving victims their day in court to tell their stories and demand recognition. Corporate criminal law must do better for victims. It (sometimes) delivers on restitution, but unequivocally fails with respect to prevention and expressive values. (43)

A corporate insanity defense would both prevent more corporate crime and lead...

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